The cost of aluminum production. How the aluminum market works

US Treasury sanctions against RUSAL have deprived one of the world's largest aluminum producers of 14% of its sales market in monetary terms. What benefit can Russian industry From this situation and how it will affect the market of translucent structures, the portal WINDOWS MEDIA understood.

US sanctions and RUSAL

Established in March 2007, United Company RUSAL is one of the top three global leaders in the production of "winged" metal. In 2017, the company produced 3.71 million tons of primary aluminum and alloys based on it for further processing and sold 3.95 million tons - 6% of the global market volume, which reached 64 million tons last year. With domestic consumption of primary aluminum in Russia, which amounted to 0.86 million tons in 2017, more than 80% of RUSAL's production is exported. At the end of 2017, Europe, including Turkey, accounted for 45% of the company's revenue, Russia and the CIS for 18%, America for 18%, including 14% for the United States, and Asian markets for 19%.

Aluminum markets and their shares in RUSAL sales volumes, USD

Source: O.K.N.A. Marketing

Prior to the announcement of US sanctions, RUSAL's business was developing successfully. Aluminum sales in 2017 grew by 3.6% in terms of tons and by 25% in terms of revenue. Relatively cheap electricity from the Siberian HPPs, steadily growing global demand for the product and leading positions in the world market provided the company with positive dynamics in the long term.

RUSAL loses a significant part of the aluminum market after US sanctions

The US sanctions apply to the import of products, services and technologies, thus completely closing the American sales market for RUSAL. In 2017, the company's revenue from the sale of aluminum in the United States amounted to more than 14%. It is not easy to quickly find a replacement for such a market.

In the European market positions Russian company remain strong so far, with the largest share of exports going to Turkey. Aluminum exports to Europe are also being increased by new producers from the Persian Gulf countries. Back in 2016, their total production exceeded the production of all of Central and Eastern Europe, including RUSAL, by 30%.



A much more powerful competitor has emerged in Asian markets. Over the past 10 years, China's share in world production of light metal has increased from 10% to 55%, and in consumption is approaching 50%. China uses in aluminum production the latest technology electrolysis, spending on the production of each ton 14.5% less electricity than Russian or European plants. Chinese manufacturers now they are not only successfully pushing Russian aluminum out of the markets of Japan, Korea, India and Southeast Asia, but also exporting their technologies there, financing the construction of new highly efficient production facilities on the ground. Despite the tariffs imposed by the US against China, Chinese aluminum will be in demand in this market.

Way out in import substitution and development of aluminum processing industries

According to the Aluminum Association, the consumption of aluminum and products from it in Russia in 2017 increased by 11%. At the same time, almost 30% is provided by imports, in which only 26% is accounted for by semi-finished products and raw aluminum. The remaining 74% are end products: household goods, building structures and profiles (including window and door profiles), pipes, tanks, etc.

The structure of imports of aluminum and products from it in value terms

Source: O.K.N.A. Marketing

Deep processing facilities will increase the consumption of aluminum products in all sectors of the economy, create additional added value and jobs in Russia.

In 2016, RUSAL announced the development own productions aluminum deep processing how about its strategic goal. The company produces aluminum and alloys from it in the form of ingots, wire rod, powders, foils, almost not engaged in the production of semi-finished products and final products, although deep vertical integration could be successful in relation to the largest aluminum producers. An example is the American company Alcoa. From primary aluminum of its own production, it produces aluminum products for the aviation and automotive industries, and is also engaged in the production of building structures and siding, including in Russia.

In addition to the development of its own production facilities, in 2017 RUSAL announced the implementation of projects in three technological valleys in the Krasnoyarsk Territory, Khakassia and the Volgograd Region. Projects are implemented jointly with regional governments. The valleys are industrial clusters near large aluminum production plants, where investors and businesses are invited to create production facilities end products using aluminum in molten form, which will significantly reduce the cost of processing. With the advent of new production facilities in these clusters, RUSAL expects to increase the consumption of its products in Russia from 20% to 25%, and in the future up to 50%.



The state understands the strategic importance of increasing aluminum consumption in the country. At the end of 2016, the Russian government approved a plan of 11 measures aimed at reducing imports of aluminum products from 30% to 10% and increasing consumption by 500 thousand tons per year by 2020. Among the measures are the revision of industry standards, customs policy, co-financing the creation of industries, the provision of tax incentives, etc.

To date, most of these projects are in their infancy.

Sanctions will benefit Russia

According to experts, the planned increase in the production of aluminum products will require from $1 to $2 billion in investments. It is impossible to achieve this goal without state support. RUSAL's idea of ​​developing industrial clusters for deep metal processing requires the participation of not only regional authorities, but also the federal center. You may need more than three clusters. For investors, both Russian and foreign, it is necessary to create tax regimes of the most favored nation, up to free economic zones. Need to speed up work on regulatory framework remove unjustified restrictions on the use of aluminum in construction, Food Industry, other industries. It is required to attract the banking sector to lend to investors and producers at preferential rates.

Structure of aluminum consumption in Russia by industry

Raw material

Bauxite is the main mineral raw material for the aluminum industry. Its reserves in the world are distributed very unevenly and are limited.

There are several bauxite-bearing regions in the world:

  • Western and Central Africa (main deposits in Guinea);
  • South America: Brazil, Venezuela, Suriname, Guyana;
  • Caribbean: Jamaica;
  • Oceania and southern Asia: Australia, India;
  • China;
  • Mediterranean: Greece and Turkey;
  • Russia (Ural).

In general, the world's natural resources of bauxite are sufficient to meet the world's demand for aluminum for an extended period of time.
Realizing the importance of the raw material base, the largest aluminum producers in the world divided the main bauxite deposits High Quality, with an alumina content of at least 50%. Other companies are left to either purchase alumina at open market and be completely dependent on market fluctuations in prices, or join forces with the owners of deposits.

Energy

The lion's share in the cost of final products (about 1/3) is occupied by electricity, and any increase in tariffs inevitably leads to an increase in costs.
Aluminum production is a very energy-intensive process; 15-16 MW/h is consumed to produce a ton of aluminum. electricity (which is 25-30% of the cost of the metal). If we trace the changes in prices for aluminum and electricity, we can see that the trends in the cost of electricity and the cost of aluminum have the same pattern of change. When the price of aluminum falls below a certain level (about $1200/ton) during a crisis, producers cannot cover electricity costs and suffer losses. During such periods, many companies seek to unite and minimize their electricity costs. In addition, some of them transfer production to alumina mining areas, to countries with cheap labor force and low cost electricity. Also, in order to reduce energy costs, aluminum producers are increasing the share of hydropower in production. Its advantage is renewability and environmental friendliness.

Transport

Transport costs have a great influence on the cost of aluminum production.
A feature of the world aluminum market is an imbalance in the location of the raw material base and the largest consumers: despite the fact that Brazil, India, Saudi Arabia and a number of North American countries are among the countries that own raw materials, the main bauxite deposits are located in Central Africa, in particular, Guinea, about 40% of the world's reserves are in Australia, and the largest producers of aluminum and its largest consumers are in the northern hemisphere.
This geographical feature has become one of the factors behind the high cost of aluminum: the cost is growing due to the cost of transporting raw materials.
Today, low maritime freight rates still allow bauxite exports from the Atlantic to the Pacific to be profitable. However, changes in the cost of sea freight may soon occur due to a significant reduction in new shipbuilding orders in 2014-2016, while the decommissioning of the old fleet continues and the volume of sea traffic increases.
In addition to the factor of remoteness of the location of enterprises from consumers, the profitability of aluminum production is affected by changes in tariffs in the direction of their increase for cargo transportation by railways. High rates lead to the fact that in many cases it is more profitable to deliver aluminum over long distances by road.

We thank the editors of the newspaper "Rusal Bulletin" for providing this material.

I'm going down

The world's largest aluminum producers are reducing metal production due to the unfavorable situation on the market, overstocking of warehouses and falling prices. All industry leaders have announced a decrease in volumes.

In particular, Alcoa plans to reduce production by 646.8 thousand tons of aluminum in total, which is 16% of the company's total production capacity. The process was launched in January last year: Alcoa finally closed two electrolysis runs at the Rockdale plant in Texas and the Tennessee plant; during 2012, it stopped production at Portovesme in Italy and reduced capacity utilization at La Coruna and Aviles in Spain. In September 2013, electrolysis production in Brazil was reduced by 124 thousand tons and in the USA, at the Massena East plant in New York State, by 40 thousand tons.

This step is necessary in view of the current difficult economic situation. Aluminum prices, as well as premiums, have fallen to their lowest levels, and we continue to work in an unstable, volatile market, - explained this decision President, Primary Aluminum Division, Alcoa Inc. Bob Wilt.

Another industry leader, Rio Tinto Alcan, announced the closure of the Shawinigan aluminum plant (Quebec, Canada). Electrolysis production here will be stopped by the end of this November - a year ahead of schedule, in order to reduce aluminum capacity by 100 thousand tons per year.

This decision was made as a result of a strategic study of all possible options for continuing the operation of the plant. Due to outdated technology and ongoing low prices for metal, maintaining Shawinigan's primary aluminum production capacity is impractical, - said Head of Primary Aluminum at Rio Tinto Alcan Arnaud Souara. And by the end of 2014, the company will also close the Arvida plant in Quebec with a capacity of 176,000 tons.

Last summer about a decrease in production volumes by 380 thousand tons per year announced Chalco. In general, the company intends to reduce production capacity by 9%. Like its competitors, Chalco attributes its decision to unfavorable market conditions. According to Bloomberg, its loss in 2012 exceeded $1.3 billion, and failure to take measures to reduce volumes would have led to even greater losses.

Norway's Norsk Hydro, the world's top five producer, also last year stopped production at the Kurri Kurri plant in Australia and the foundry at the Ardal plant in Norway due to unfavorable market conditions.

The financial crisis has led to serious problems in the automotive and construction industries, which are the main consumers of aluminum products. in Norsk Hydro's statement.

With record low prices for aluminum and overproduction of the metal, a decline in volumes became inevitable.

Global aluminum producers must cut production by 2 million tonnes overall to eliminate oversupply that is driving businesses to losses, he said. RUSAL Strategy and Business Development Director Oleg Mukhamedshin at the International Aluminum Conference in Geneva. - The aluminum industry needs to be more disciplined.

Reduction of aluminum production volumes by world leaders (declared)

Source: Interfax

Task: minus 15%

The decision to reduce volumes was also made by RUSAL. The company approved a two-year program to reduce production. In 2013 alone, aluminum production was reduced by 324,733 tons, which is 8% of the 2012 volume.

In particular, electrolysis production was completely suspended at the Volgograd, Volkhov and Ural aluminum smelters, at the first site of the Novokuznetsk aluminum smelter and at ALSCON (Nigeria). Also, production was mothballed in buildings 2, 3, 4 and 5 of the Bogoslovsky (the first building was mothballed in 2011) and buildings 1, 2 of the Nadvoitsky aluminum smelter (building 3 was mothballed in 2012).

In addition, due to a decrease in current strength and other measures, production volumes were reduced at the Sayanogorsk, Irkutsk, Novokuznetsk (second site) and Khakassk aluminum smelters.

The program will continue in 2014 as well. In total, RUSAL plans to reduce production volumes by 15% against the 2012 figures. In absolute terms - by 647,504 tons of aluminum.

These figures, according to the Company's analysts, are optimal given the current situation in the industry, market conditions, and fluctuations in exchange prices for aluminum. Reduction of production in this volume - no more, but no less - will allow RUSAL to obtain the lowest possible cost of metal and the highest profitability. This is already confirmed by the results of the work. After the reduction of unprofitable production, the cost of producing a ton of aluminum at RUSAL decreased by $40. According to the results of the first half of 2013, this figure was 1942 dollars, and according to the results of the second quarter - already 1911 dollars. At the same time, the cost price in April-June was the lowest since the end of 2010.

At the same time, the unfavorable market conditions affected the fate of the Boguchansky aluminum smelter under construction. If earlier the launch of the first stage was scheduled for the end of this year, now it has been postponed to the middle of 2014. And although, according to calculations, the cost of aluminum production at BoAZ will be the lowest in the Company - $ 1,700 per ton, RUSAL decided to postpone its launch so as not to completely destroy the balance in the world market.

RUSAL continues to respond to current situation on the market and may consider taking additional measures to reduce the cost of production - so first Deputy Director General RUSAL Vladislav Solovyov commented on the decisions taken.

Cost of aluminum and its LME price ($/t)

Source: Interfax

Russia is not China

Today, the world's huge aluminum production capacities are operating at a loss. Since July 2008, the price of winged metal has fallen by almost 40%. A year ago, according to RUSAL analysts, 25% of world aluminum production was unprofitable. Today this figure is 40%.

And many are still profitable production balance on the verge of profitability and in the event of jumps on the stock exchange, they can also “go into the red”. Thus, in August of this year, prices for aluminum futures on the LME fell to the level of 1800-1850 dollars per ton. With this indicator, in general, about 75% of the world's winged metal manufacturers are unprofitable.

Most of the world's aluminum producers agreed with the need to reduce production volumes to save the industry from a collapse. Except for the Chinese, who are subsidized by the state.

In China, the government subsidizes unprofitable factories. Vertically integrated companies allow profitable products deep processing by subsidizing losses up the chain, and multi-commodity groups cover losses from aluminum at the expense of other metals, Oleg Mukhamedshin emphasized.

Russia is not China, and our situation is sometimes mirrored. RUSAL sent its unprofitable production facilities for conservation. There are many reasons for their unprofitability: outdated equipment, imperfect technologies, high costs for compliance with environmental requirements, etc. But even a global costly modernization and the introduction of the most advanced technologies, according to industry experts, in the current situation, these production facilities could not be saved. It's all about sky-high electricity prices and transportation that devour all potential profits.

Due to the policy of cross-subsidization in the power industry, when electricity is supplied to the population at a low tariff, and the associated costs are passed on to large industrial consumers, Russian aluminum turns out to be “gold”. This was especially felt by the plants of the Zapad aluminum division, for which the average electricity tariff has increased by 76% since 2007, to 5.14 cents per kWh. This is already even higher than in the US and the Nordic countries.

The "champion" was the Volgograd region, where the electricity tariff for VgAZ reached 6 cents per kWh (1.94 rubles). As a result, the cost of electricity for the production of one ton of aluminum to the plant cost 810-900 dollars. Approximately the same amount in the cost structure of a ton of metal is occupied by the cost of electricity from Chinese comrades who are not concerned about saving: with significantly more expense electricity, it costs several times cheaper, but the costs are still compensated by the state.

RUSAL management has repeatedly asked the authorities to intervene in the tariff setting policy and reduce the cost of electricity for VgAZ at least twice - to the European level. This alone could save production at the plant. However, the metallurgists did not wait for any decisions. And they were forced to act on their own.

What doesn't kill us makes us stronger

The further fate of each of the mothballed electrolysis plants will be decided depending on their condition and potential. Most of them after the change in market conditions can resume production of aluminum.

Part of our production, which we are suspending, in three to four years can be modernized in such a way that they become producers of aluminum products, integrated into a wider supply chain at the stages of processing and marketing to the final consumer. It is these plans that the government supports,” Oleg Deripaska said. According to forecasts, in 10 years the demand for primary and secondary aluminum in Russia will almost triple - up to 2.5 million tons per year. In this case, the available capacity may not even be enough to meet the demand.

RUSAL also signed a memorandum of intent with Vnesheconombank on cooperation aimed at re-profiling closed plants. Among other things, they plan to organize the production of various products from aluminum and its alloys. To work within the framework of the agreement, RUSAL will look for partners, as well as provide them with the infrastructure of existing industrial sites. Work in this direction is already underway. Thus, in June, RUSAL signed a memorandum with the Israeli company Omen on the establishment of a joint venture for the production of automotive components. Vnesheconombank is ready to participate in such projects as an investor. His assistance in re-profiling unprofitable plants will reduce the impact of low aluminum prices on financial results.

According to market experts, under the current unfavorable market conditions, RUSAL conducts the most effective policy aimed at reducing costs. In the future, this will contribute to the development of the Company.

“RUSAL will emerge from the crisis as a much stronger and more profitable company. The decline in aluminum prices that affected the industry in 2013 allowed RUSAL to close its most unprofitable production facilities, which the Company could not close at higher prices due to opposition from regional and federal authorities,” reads an analytical report on the situation in the aluminum industry. report Investment company Veles Capital. According to analysts, due to the closure of unprofitable production facilities and the launch of BoAZ next year, the Company will continue to reduce production costs. And the increase in its profitability will also be affected by a reduction in the share of primary aluminum output with an increase in the volume of alloys and other value-added products.

As for the short term, the closure of unprofitable production facilities will provide aluminum companies with higher operational efficiency, free up part working capital. However, it is not capable of globally influencing world prices due to the current situation and significant stocks of aluminum in warehouses. And one of the global risks is the possibility of metal intervention on the market from LME warehouses. Therefore, under the worst-case scenario and a further fall in aluminum prices, companies will have to continue to reduce production volumes. At the best, the process of restoring the balance will begin, in which the physical price will begin to drift within two or three years to $2,400-$2,500 per ton acceptable for many producers.

Text by Danil Klyakhin, photo from the editorial archive

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JSC "Kazakhstan electrolysis plant" (KEP), which is part of ENRC (Eurasian Natural Resources Corporation) - the only plant in Kazakhstan for the production of primary aluminum. The plant is located in Pavlodar. Opened in 2007. It includes an electrolysis shop, a foundry shop, an anode production shop and other auxiliary departments. On its basis, a metallurgical cluster with a full production cycle was formed: bauxite mining, alumina production, production of "winged metal". At present productive capacity plant - 125,000 tons per year. Aluminum is produced in twenty-kilogram ingots of grade A-85 (contains 99.85% aluminum).

In the meantime, we will begin to study the technology of aluminum production in photographs.


general information
Aluminum is a chemical element of the third group of the periodic table of elements of D. I. Mendeleev. In terms of content in the earth's crust, aluminum ranks first among metals and third among other elements (after oxygen and silicon). The earth's crust is 8.8% aluminum (for comparison, the content of iron in the earth's crust is 4.2%, copper - 0.003, gold - 0.000005%). In nature, aluminum occurs only in the form of various and very diverse compounds. Most of them are aluminum oxide - in everyday life it is called alumina, or simply clay. Clay is about a third of aluminum oxide and is a potential raw material for its production.

Aluminum has a number of properties that distinguish it from other metals. This is a low density of aluminum, good ductility and sufficient mechanical strength, high thermal and electrical conductivity. Aluminum is non-toxic, non-magnetic and corrosion resistant to a number of chemical substances.

The most important consumers of aluminum and its alloys are the aviation and automotive industries, railway and water transport, mechanical engineering, the electrical and instrumentation industry, industrial and civil engineering, the chemical industry, and the production of consumer goods.

Aluminum production
The essence of the aluminum production process is to obtain anhydrous, free from impurities of aluminum oxide (alumina), followed by the production of metallic aluminum by electrolysis of dissolved alumina in cryolite.

Technological process aluminum production consists of two main stages:

Obtaining alumina (Al 2 O 3) from aluminum ores;
Electrolysis and refining of aluminum from alumina;

Alumina is obtained from bauxites by treating them with alkali. The resulting sodium aluminate is subjected to hydrolysis. As a result, crystals of aluminum hydroxide precipitate. Aluminum hydroxide is dehydrated by heating in rotary kilns to obtain dehydrated alumina.

For the production of cryolite, first hydrogen fluoride is obtained from fluorspar, and then hydrofluoric acid. Aluminum hydroxide is introduced into the solution of hydrofluoric acid, as a result of which fluoroaluminum acid is formed, which is neutralized with soda and cryolite is obtained, which precipitates. It is filtered and dried in drying drums.

In this way, alumina is obtained, which is a gray powder. The next task is to isolate pure aluminum from it using electrolysis. Now the fun begins:

Workshop for the production of anodes

2. The aluminum industry is a major consumer of carbon electrodes, which are used to supply current to the electrolyte in electrolyzers.

3. Pressed prebaked electrodes are produced here.

4. The anode is a prismatic block, on the upper plane of which there are several nipple nests (recesses).

5. Anode blocks are made from low-ash and low-sulfur cokes.

6. To supply current to the anode, steel nipples are used, which are inserted into the nipple sockets and filled with molten iron or sealed with carbon paste.

7. For the production of carbonaceous products, solid carbonaceous materials are used, which form the basis of the electrode, and binders of carbonaceous substances that fill the gaps between the grains of solid carbonaceous materials. When products are fired, the binders coke and firmly bind the grains of solid carbonaceous materials to each other.

Electrolysis shop

10. A modern electrolysis shop is a territorially and administratively separate self-supporting unit with a full production cycle - from receiving warehouses of raw materials to warehouses of commercial products, the basis of which is one or more series of serially connected electrolysis baths.

11. The electrolyzer is a bath of molten cryolite, double sodium and aluminum fluoride, in which 3–5% alumina is dissolved, floating on a bed of molten aluminum. Steel bars running through a carbon plate hearth are used to energize the cathode, while suspended coal bars immersed in molten cryolite serve as anodes. The operating temperature of the process is close to 950°C, which is much higher than the melting temperature of aluminum. The temperature in the electrolysis bath is controlled by changing the gap between the anodes and the cathode metal receiver, on which molten aluminum is deposited.

14. Liquid aluminum released on the bottom, which serves as a cathode, is heavier than the electrolyte salt melt, therefore it is collected on a coal base, from where it is periodically pumped out. From above, carbon anodes are immersed in the electrolyte, which burn in the atmosphere of oxygen released from aluminum oxide, with the release of carbon monoxide CO and carbon dioxide CO 2 .

15. The current on the electrolyzers is 150,000 A. The operating voltage on the bath is 4-5 V. There is a strong electromagnetic field near the electrolyzers.

16. Special machine for transporting anode pallets. They are used for transportation of fresh anodes and anode cinders between the anode assembly department (AMO) and the electrolysis building.

17. The overall dimensions of the workshop are impressive. Behind the same row of pots, and next to it is a second workshop of similar size.

18. Typical for the production of alumina, fluoride salts and carbon products is the requirement for the maximum degree of purity of these materials.

19. The composition of the electrolyte of industrial aluminum electrolyzers, in addition to the main components - cryolite, aluminum fluoride and alumina, includes small amounts (up to 8-9% in total) of some other salts, which improve some physiochemical properties electrolyte and thereby increase the efficiency of electrolyzers.

20. As the electrolyte becomes depleted of alumina, another portion of alumina is introduced into it.

foundry

21. The foundry department is located on the territory of the electrolysis shop in such a way that transport routes liquid metal from the electrolysis chambers to the foundry department were minimal. The main equipment of this department is reverberatory ovens (mixers) with electric heating.

22. Usually, to improve the quality of products, two paired reverberatory furnaces are installed in series, one of which (settler) is intended for receiving, settling, averaging the temperature and composition of the metal, and the other (pouring) for casting from it various kinds products. The system of stationary furnaces, in contrast to rotary ones, makes it possible to carry out a continuous casting process.

23. Liquid aluminum is kept in an electric furnace for 30-45 minutes at a temperature of 690-730 ° C for non-metallic inclusions to float up and gases to be released from the metal.

24. Impurities are removed by refining, for which chlorine is blown through
aluminum melt. The resulting vaporous aluminum chloride, passing through the molten metal, envelops the particles of impurities that float to the surface of the metal, where they are removed. Aluminum chlorination also helps to remove Na, Ca, Mg and gases dissolved in aluminum. After refining, the purity of primary aluminum is 99.5-99.85%.

25. Pouring of small-sized ingots is carried out into molds on a conveyor-type filling machine equipped with a device for mechanical branding of ingots and an air or water cooling system for molds.

26. Pouring metal into molds is carried out with a short, even stream. After filling the molds, the oxide film is removed from the metal surface.

27. Device for mechanical branding of ingots.

28. The cast ingots are stacked using an ingot stacker installed at the end of the conveyor machine.

29. After that finished products packed in pallets of 1000 kg and sent to the warehouse.

30. The production of one ton of aluminum requires about 14,000 kilowatt-hours of electricity and about two tons of alumina. At the same time, it takes about 5 tons of bauxite ore to produce one ton of alumina. At present, the cost of aluminum on the London Metal Exchange is $2,600 per ton.

Video from the electrolysis plant. I made a small mistake by trying to shoot a photo and video at the same time, as a result, the video has pauses at the moment of exposure.

A book for self-study.